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It's been said that you have to spend money to make money, and one analyst believes Take-Two is poised to do both in abundance with the upcoming Grand Theft Auto V. In a note to investors today, Sterne Agee's Arvind Bhatia said the game's recent delay will add to its development costs, but does nothing to blunt its potential success.

Bhatia detailed a "hypothetical profitability model" for GTA V based on an estimated development cost of $137.5 million (representing a team of 250 people working on the project for five years). Even adding projected marketing costs between $69 million and $109.3 million, Bhatia saw GTA V providing huge returns for Take-Two. In the event that GTA V sells "only" 15 million copies, Bhatia estimated Take-Two would still see more than $193.6 million in operating profit from the game for its fiscal year, or an earnings per share contribution of $2.11. Should the game outperform expectations with 25 million copies sold (a figure that assumes a much higher marketing spend), Bhatia put Take-Two's operating profit from the game at $390.8 million, with an EPS contribution of $4.26.

At the moment, Bhatia believes GTA V will sell 18 million units in Take-Two's fiscal year, saying it's likely to be the best-selling game of the year. Bhatia suggested it could be second only to the next Call of Duty, which he identified as Call of Duty: Modern Warfare 4. As for the delay, the analyst said it will make for a more crowded holiday market, especially combined with the potential of new consoles. Regardless, Bhatia said, "[T]his is a long-awaited title that consumers are unlikely to pass up and we remain bullish on our outlook for this title and for the company."

Yesterday, Take-Two delayed Grand Theft Auto V from its previous spring release window to September 17. The news drove Take-Two stock down sharply, although it had regained most of its value by mid-day trading today.

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4 Comments

It'll no doubt make money as its a game that for some is the reason they buy consoles for (i remember working with some guys who were buying a PS3 for the sole purpose of getting GTA 4).

Personally I am not that bothered about it as I just can't help but get tired/bored of sandbox games such as this very quickly. Typically I'll do a few missions, get to an awful "taxi" mission then give up and go on a rampage followed shortly by turning it off and loosing interest. I don't think I've actually finished a GTA game since 3 on PS2 as I just get bored of traveling so much (applies to other open world sandbox games such as Saints Row, Just Cause etc.).

I have respect for the game and studio non the less as at least they have taken time over this rather than regurgitate a new release every 12 months.

Can't help but feel that perhaps the release window being moved is tied with all the heat games have been getting for violence as if I remember correctly caused an outrage over its initial release many moons ago.

$137 million and still quiet on if a PC version is coming or not. I'm sure the cost of a PC version with all the gubbins (like the Max Payne 3 Port) would not add much more. Give it to Rockstar Leeds to do already

With the next gen consoles coming out this year and with (I assume) the Last Guardian being a launch title for PS4, it's almost a missed opportunity for GTA5 to not be a launch title as well. They could always do a Zelda Twilight Princess Wii/GameCube multiple version release.